Bullet Point Network is a company that helps investors and portfolio companies make better decisions using their Strategic Scenario Models. To learn more about the company Pulse 2.0 interviewed Bullet Point Network CEO and co-founder Mike Ryan.
Mike Ryan’s Background
Ryan graduated from Yale and went right to work at Goldman Sachs. And Ryan spent almost two decades there, was a partner at the time of the Goldman IPO, and for about eight years after, ultimately serving as Co-head of the Global Equity Business.
“After I left Wall Street, I started my own family office (which I still have today) and about 5 years into that, Harvard University asked me to manage some money for the school’s endowment. I was responsible for $6 billion of direct investments and $12 billion in allocation to outside managers and I served in the Investment Committee,” said Ryan. “To support our direct investing team, we licensed the analytical software that underlies our current platform to Harvard and later spun out to create Bullet Point Network (BPN). BPN has now fully developed an interactive SaaS platform and offers analysis services to Private Equity and Venture Capital Funds and often to their portfolio company CEOs and Boards. We build Strategic Scenario Models that help these investors and executives to make better decisions.”
As Ryan had started at Goldman as an analyst, he still loves nothing more than analyzing a business and considering whether its outlook for growth and profitability makes it an attractive investment today.
“I have analyzed hundreds of companies, often working closely with them to navigate the capital markets, execute their business plans, and seek profitable exits. In addition to making direct investments for Harvard, I was also fortunate enough to co-invest with some of the best investors in the world,” Ryan added. “I learned a lot from them about scenario analysis, primary research methods, and risk management. I’ve also managed complex businesses(ranging from dozens to thousands of employees) and served on multiple boards, developing an operator’s perspective on how execution, innovation, human capital, and decision-making drive growth, profitability, and scale.”
Formation Of Bullet Point Network
How did the idea for BPN come together? Ryan told me that he always felt that people have to consider a range of outcomes and try to put odds on the likelihood of different potential results. He started out by making four tabs on a spreadsheet, each representing a different scenario, and trying to think about the odds of each coming to pass.
“The most critical insights come from human judgments about the management team, the market opportunity, the product differentiation, and the competitive dynamic. We feel investors and CEOs can do a much better job of translating their views on these critical fundamental drivers, into quantified scenarios for future cash flow and valuation,” Ryan explained. “Everybody now understands that cognitive bias exists, and good investment process is designed to mitigate bias as much as possible, but unfortunately the tools available are not as sophisticated as the decision-makers themselves, so many senior leaders end up ‘doing most of it in their heads’ despite often having long investment memos and detailed spreadsheets in their files when the deal is done. We felt that if we could better connect the story to the numbers, recognize the inherent uncertainty in forecasting the future, mitigate confirmation biases and bandwagon effects by mapping evidence to each assumption, and enable decision-makers to transparently control a center point and range for key assumptions that drive future cash flow and valuation scenarios, we could help people make better decisions. We did that by creating Bullet Point Network.”
Challenges Faced Building The Company
What were some of the challenges Ryan faced in building the company? Following years of providing strategic advice and analysis to many early-stage and growth companies, and having had the opportunity to create several new business units inside of large firms, Ryan now has the joy of building BPN from the ground up himself with co-founder Peter Moore and a talented team of analysts and software developers. Plus Ryan now has even greater respect now for the many founders he has invested with over the years and learned firsthand that building a company is no easy task, especially when you are trying to define a new category.
Ryan noted BPN is bringing a new ‘mousetrap’ to investors and CEOs who have been very successful using their existing processes and tools. Some of the challenges the company faces arise from the very issues and questions they are seeking to address.
For example, how do you create a platform that enables investors to balance intuition with data? How does one quantify narratives to avoid common biases and pitfalls that negatively impact investing outcomes? How can you foster debate and capture the full range of evidence before settling on a key assumption? What kinds of parameters and user interfaces are needed to effectively support investors’ ability to marry logic (i.e. their own well-considered views) with probability (i.e. the odds of different scenarios playing out) to more accurately predict future outcomes for cash flow and probability? What about exit multiples, the Achilles heel of most investment memos? How can the company do a better job of predicting how the company’s outlook and capital markets conditions will distill into a multiple when they go to sell or refinance the business?
“BPN has a novel process. As is the case with charting any new territory, carving a path to reimagine how investors and decision-makers ‘quantify the story’ of a company and its ability to grow and become profitable isn’t easy,” Ryan pointed out. “Each company is different, and our models need to be customized to capture the key drivers of a particular business, just as you would in a good investment memo or spreadsheet. Yet, it’s an exciting opportunity for us to create a SaaS Platform and offer services that offer a unique framework that brings more rigor to understanding the future outlook for a company’s growth and profitability, relative to its price today.”
Core Products
What are Bullet Point Network’s core products and features? BPN transforms the investment process by using its software for translating the decision maker’s judgment and intuition into quantified scenarios for cash flows and valuation with explicit odds of upside and downside.
In doing so, BPN provides guardrails against hubris by mapping evidence directly against each assumption to foster debate – which allows a center point and range around each assumption and asserts logic by grouping those assumptions into logical combinations based on what success looks like for the business under different scenarios.
Plus BPN’s models also forecast capital market conditions and enable users to see the impact of both company success and capital markets on valuation. Zooming into specific cases with real cash flows and zooming out to see percentiles that capture the odds based on your views informs every decision and can be easily updated if information or judgments change over time.
BPN’s Strategic Scenario Model offers a comprehensive set of cases for future cash flow and valuation based on fundamental views about the degree of competitive differentiation, the size of the various market opportunities, and the unit economics of the business. Rather than just focusing on the recent past and projections for the next year or two with false precision, BPN models scenarios for growth and profitability over the long term, focusing on the path to peak profitability, which is ultimately the main driver of exit multiple and overall investment returns from today’s entry price. DELETED WORDS along with prevailing capital markets conditions.
User Interface – BPN’s software and integrations are streamlined into a single and simple-to-use interface where models, research, input tables, and output formats can be accessed by every member of an investment team. And this enables anyone on the team to add research, debate assumptions, explore output, update the model and save versions of the model over time.
Technology & Integrations
— BPN Writer – An underlying, proprietary, and patented graph database and analytics engine that enables the logical manifestation of various scenarios.
— Tiles – How BPN inputs tables and outputs to its library, where users can explore and customize charts and tables, change and save assumptions, save versions, and even start a new company based on BPN’s proprietary templates that have been built over the system’s lifetime.
— Tableau Dashboard – BPN has integrated with Tableau and created automated exports from the SSM to create workbooks to display the output of the strategic scenario model. And BPN’s Tiles are much more flexible to create, calculate and display, but if clients prefer Tableau, there are many automated dashboards to choose from.
— Slack Channels and Email Updates – BPN values logical debate based on high quality and debiased data so BPN is integrated with Slack and Gmail to push notifications to users anytime new research is added, whether as an output that has been created or analysis that has changed.
Evolution Of BPN’s Technology
BPN has made several key iterations, primarily to enhance the user experience. And BPN now offers users more intuitive navigation to explore scenarios, visualize the odds of success, debate key assumptions, add new evidence, create their own versions, and start a new company analyzing themselves using BPN’s templates.
The underlying analytical engine has not changed much since the company licensed it to Harvard, but BPN is constantly building new templates to better analyze businesses in different industries, with different business models, and different capital structures. Plus BPN has also done various things under the hood to improve processing speed, memory management, and overall system performance.
“We remain nimble to additional evolutions in the future as user data continues to aggregate and investment markets continue to evolve,” Ryan shared. “We have continually experimented with Natural Language Processing and AI generally, and believe its greatest use case in the context of investment decision making is in helping humans more quickly filter down what to read to inform their key judgments, rather than having AI provide those judgments directly.”
Biggest Milestones
What have been some of Bullet Point Network’s biggest milestones? One of the company’s biggest milestones is the creation of a platform and service that identifies what they call the “Goldilocks Zone,” the “just right” balance between seasoned investor intuition and hard data analysis (i.e., the ability to logically quantify stories about a company and identify risk across various scenarios with transparently controlled assumptions).
Customer Success Story
When I asked Ryan about a customer success story, he cited BPN as playing a pivotal role in enhancing the investment process at firms across different stages and specialties, including Patriot Financial (private equity buyout fund, focused on banks and fintech), Alpha Partners (growth equity fund, specializing in co-investments via pro-rata rights of early-stage VCs) and Branded Hospitality Ventures (early stage venture fund, specializing in hospitality tech). Each of these firms used BPN’s platform multiple times to build conviction around investments by translating their deep domain expertise, fundamental insights, and access to proprietary data, into quantified scenarios for cash flow and exit valuation.
Funding/Revenue
Are you able to discuss funding and/or revenue? “Given my enthusiasm to expedite the development of BPN, I self-funded the platform’s development. The process of developing a category-defining product is more a marathon than a sprint, meaning there will be plenty of time to bring in investors down the line if needed,” Ryan replied. “We’ve been mainly focused on product development, but we have captured millions of dollars in revenues and been rewarded with a small share of the carry-on of some favorable investment exits by our initial set of clients over the last three years. We are only now ready to roll out a largely self-directed SaaS platform that investors can confidently use on their own and will continue to offer our advisory services to those Funds and CEOs who like having BPN as an extension of their team. “
Total Addressable Market
What is the total addressable market (TAM) size that Bullet Point Network is pursuing? “Private equity and venture capital investors spend a great deal of time and money vetting their investment decisions and doing analysis to advise their portfolio companies over time. In addition to the cost of their own internal teams, they often hire 3rd party consultants, use expert networks, purchase data sets, and engage,” answered Ryan. “According to a recent McKinsey report: ‘Total private markets assets under management (AUM) reached $11.7 trillion as of June 30, 2022. AUM has now grown at an annual rate of nearly 20 percent since 2017.’ While management fees vary and certain third-party expenses are charged directly to the Fund, we estimate that these managers spend at least one-third of their management fee income to support research and analysis, which means the industry spends in excess of $75 billion per year (inclusive of internal salaries).”
Differentiation From The Competition
What differentiates Bullet Point Network from its competition? Bullet Point Network is known as the first-of-its-kind, category creator with a novel process.
“No one else does what we do, and we are charting our own path to figure out how to help investors and CEOs make the best investment decisions they can,” Ryan reflected. “Much like the story of Goldilocks, BPN helps clients avoid the “too cold” bowl of over-reliance on past data and the ‘too hot’ bowl with over-reliance on intuition. Instead, the bowl that BPN provides is just right – it combines both fundamental intuition and qualified scenarios for cash flow and valuation.”
Future Company Goals
What are BPN’s future company goals? “Our primary goal is to help investors and CEOs make better decisions. We know that if we deliver a platform that enables them to harness the vast knowledge and intuition that they have accumulated, translate it into actionable decision-making analytics, and improve their investment returns over time, our own success will follow,” Ryan concluded. “Our initial focus has been professional private equity and venture capital funds because they tend to make long-term investment decisions and have deep expertise, but we have worked with a number of SPACs and SPAC company targets, family offices, and independent sponsors who make direct and co-investments. Concentrated investors in public equity are a natural focus area since they tend do deep fundamental work and invest with a long-term horizon. We can use our platform to build strategic scenario models on public equity, private equity , and private credit, and to help larger companies (and their boards) make long-term capital allocation decisions and navigate the capital markets.”
